As institutional investors increasingly pour dollars into private markets, they are focused on evaluating their options, analyzing the accuracy and timeliness of the data they can access; their funds’ liquidity needs; the effect of artificial intelligence on both portfolios and markets; and geopolitical uncertainty.
A survey from Northern Trust Asset Servicing gathered insights from 181 institutional allocators, including outsourced CIOs, pension funds, insurers, endowments and foundations, health care systems, superannuation funds, family offices, central banks and sovereign wealth funds.
The survey polled these investors’ views on investment strategy, asset allocation, risk management, liquidity considerations, operational efficiency and service providers, technology and data infrastructure, and future challenges.
Allocation Breakdowns
Allocations to private markets were near ubiquitous among the allocators surveyed—approximately 94% of respondents said they invested in private markets, up from 86% in 2025.
Jessica Donohue, Northern Trust’s head of asset servicing for the Americas, notes that last year, allocators increased their allocations to fixed income, cash positions and hedge funds, but this year, they are expected to reduce their allocations to public equities.
“The public equity markets have … returned a great deal over the last year, so they would reallocate away from public equities into public markets,” Donohue says. “What we’re seeing is that they expect to stay flat in other asset classes.”
According to the report, asset owners reported a 42% allocation to equities, followed by fixed income (29%), private markets (17%), cash (8%) and absolute return strategies (5%).
Allocators also noted challenges when it came to accessing the best possible funds. According to the report, 31% of respondents listed among their top investment challenges the ability to invest in their desired funds and with their desired managers. The access problems were cited as slowing deployment of funds for some institutions.
“There seems to be, in [the] … mid to small range [of fund sizes], … a bit of consternation that they can’t get access to the private asset funds that they would like to,” Donohue says. Additionally, many allocators noted that the increased pace of investments in private markets is leading to more operational challenges.
“They’re taking on more operational needs, they need better insights, they need to be bringing together their public [market positions] and their privates into one view, and so they continue to wrestle with data, liquidity around private markets and being able to operate with this increased allocation to private markets,” Donohue says.
Liquidity concerns were noted by 60% of allocators, according to the survey, with investors saying it has become more important over the last 12 months, as private markets are increasingly becoming a part of allocator portfolios.
“That was the same as last year, but the reason why they said it was important changed,” says Katherine McCabe, Northern Trust’s head of OCIO asset servicing and commercial strategy. “Instead, last year the main driver on what was most influential was interest rates. … 75% of our clients said that was a key driver.”
Interest rates were cited as the main driver by 60% of respondents this year, with overall risk strategy driving allocators’ liquidity concerns. Additionally, the survey found that 47% of allocators invested in digital assets, primarily through direct exposure and exchange-traded funds.
Essential Data
Data and technology are increasingly important for allocators, especially as artificial intelligence gains wider adoption among these investors. Approximately 68% of respondents said that harnessing the power of AI was a top operational challenge, up from 56% from last year.
Investors reported using AI for a variety of purposes—for research (63% of respondents), investment due diligence (62%), document management and alternative investment processing (57%), operational due diligence (52%), data accuracy and quality control (46%), and client reporting and communications (30%).
The growth of AI has made the availability of good data even more important.
“Over half the respondents said they struggle with data quality in doing these activities,” Donohue says, and approximately 57% of respondents said that integration of data was incredibly important in their operations.
McCabe also notes that AI cannot be effective without accurate data.
“The more complex these portfolios get, the more it’s important—and particularly as a lot of our clients are sourcing information from multiple providers to leverage new technology like AI, the more important it is—that we can bring that data together in an accurate and meaningful and timely way,” McCabe says. “Data is important, but it has to be right.”
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